In A day late and a dollar short (Archives, September 2012), I grumbled about the FCO’s belated intervention in Cayman’s fiscal affairs. The FCO clerks’ chronic Attention Deficit Disorder had allowed our small-island politicians and senior Civil Servants to spend and borrow as if there were no tomorrow. "A day late and a dollar short?" I scoffed. "More like fifteen years late and several billion dollars short!"
I meant to write twenty-five years late, not fifteen; that was careless. It was in 1987 that our then-rulers opted for an income-tax as a preferable alternative to disciplined spending by government. I was involved in the Chamber of Commerce’s victory over that option (Confessions of a subversive, October 2012) – but a limited victory it was. We did vanquish the proposed income-tax, and the guilty MLAs were defeated in the next parliamentary election; but all subsequent rulers have shamelessly indulged themselves in ever more reckless borrowing.
For a belligerent nation that invades foreign countries at the drop of a hat, Britain treads amazingly softly around its colonial tax-havens. Not without reason, of course. Most well-connected British companies divert a portion of their profits to places like Cayman, and much of the loot from the invasions is channeled through the havens. Some of it ends up in the re-election coffers of friendly politicians. That’s just the way it works.
After years of pussy-footing around, the FCO clerks recently suggested – ever so diffidently – that our chaps might give some thought to a slight reduction in the scope of government. So privatization is on the Islands’ agenda at last.
So far, discussion has been limited to the possible sale of loss-making state enterprises. Our Turtle Farm is a good example of what is available. It has been losing ten to twelve million dollars a year for the past how-long. There are no recent audited accounts, so the venture is to all intents a bottomless money-pit.
Last week it was reported that a skilled turtle-feeder was earning $90,000 a year; that’s US$108,000. We weren’t told exactly how skilled he was, but it seems a bit OTT. (I myself was a skilled chicken-feeder, at the age of five, and my pocket-money was never anywhere in that range. I’m beginning to wonder if my parents were short-changing me.)
The government’s reluctance to let go of such a crony-magnet is evident in the predictable conditions for its sale – no Caymanian employees to be fired or demoted (however overpaid or underworked), a government “golden share” with the power to veto all decisions of the Directors, all debts to government to be honoured (i.e. for past subsidies), and current subsidies to be discontinued immediately. What a joke.
This Turtle Farm is several things: a commercial farm, an endangered-species refuge, a tourist attraction with bells and whistles, and a zoo with a snack shop. It occupies a block of prime sea-front real-estate, which is the only thing that any private investor is likely to be interested in. All the operations could and would be closed down in a month, if private-sector standards were applied – but will almost certainly take a year or more using civil-service standards. Full privatization of all unnecessary government operations will take the best part of a generation.
Of course selling state-owned assets is a one-off fix at any time, and when bureaucrats are involved in the selling it’s an invitation to fraud on a massive scale. It’s how Russia ended up with so many overnight billionaire oligarchs. It created a few billionaires in Britain, too, during the Thatcher years. The amounts are smaller in Cayman, but there are plenty of bureaucrats and cronies panting for the chance to pick up government assets for cents on the dollar.
Selling off the operations side would save a heck of a lot more money, every year the government didn’t run them at a loss. The best way to minimize interception by crooked public figures and their relatives is to break the businesses into separate units – and, not to rush the process. Well, we know the process won't be rushed (!), but as for the rest... Hmm. We’ll have to wait and see if maybe little old Cayman can’t come up with one or two instant billionaires. Is anybody taking bets?